How to Correct a W2 Form and Avoid Mistakes in the Future
Ever wondered how to correct a W2? Tax season is quickly approaching and despite your best efforts, an employee calls you in desperation asking you how to correct a W2 form. Let's address how to correct a W2 error. The IRS assessed more than $5 billion in penalties and fees for incorrect W2 forms on business taxes last year, and much of that was for filing incorrect information.
Your money doesn't have to be added to that pile. A mistake on a W2 form isn't the end of the world, you just need to address how to correct a W2. It is an urgent issue however that needs to be rectified quickly. These mistakes also add time and expense to your payroll process. Many businesses like yours have learned how to avoid these costly missteps.
Are you looking to make your payroll and tax reporting go more smoothly? Read on for an indispensable guide on how to correct a W2 and avoid future mistakes.
Also read: What Happens If I Only File 1 W2 Form?
So Many Forms, So Little Time
With all the myriad forms that need to be completed for tax purposes, each with their own quirks and details, it's no wonder that mistakes happen and you find yourself asking how to correct a W2. When you discover an error on an employee's W2 form, take a breath and stay calm. It is possible that the IRS may impose a fine of $50 per incorrect W2 form that you have filed.
However, if you can show that the error was out of your control and that you worked quickly to correct a W2 error, the IRS may waive that penalty. In addition, if the error is deemed inconsequential, the fine won't be imposed at all. Do you know how to go about and correct a w2 form? Are you using the right forms?
For more information on which form is the correct one to use for your employees, check out our trusted guide to the W2 versus 1099.
Also read: How Does ASC 606 Apply To Private Companies?
When To Correct A W2
Work to correct the W2 error as soon as you find a mistake. Whether you have filed the incorrect information already, or simply sent an incorrect W2 to your employee, the process for correcting the form is outlined below. Common errors can include a mistake in social security number (SSN), incorrect employee or employer address, name misspellings, or even misstated withholding amounts.
The earlier you catch and correct a W2 error the better.
How To Correct A W2
Let's dissect how to correct a w2 error. If you've already filed the W2 form with the Social Security Administration (SSA), you will need to purchase the form W2c - Corrected Wage and Tax Statement from the IRS website. The W2c form can be used to correct a variety of errors. This includes incorrect employee information like social security number, address, or withholding amount.
This form will also cover employer information such as an error in the employer identification number (EIN) or multiple W2s being filed. The W2c form can be found on the IRS forms website. You must also complete form W3c - Transmittal of Corrected Wage and Tax Statement. Don't forget to send a copy of the W2c to your employee as well.
If you sent out the W2 to the employee, but haven't filed it with the SSA yet, the process is a little simpler. First, void the original W2. On the incorrect W2, check "void" on Copy A, which is the copy you would send to the SSA. Next, create a new W2 for the employee and make sure to mark that it is "Corrected" at the top of the form. Send out the corrected W2 to the employee.
When you're ready to file your W2s, send Copy A of the new W2 to the SSA. There is no need to mark "Corrected" at the top of this form, as it is the first form they will see from you.
Also read: Getting A Copy Of A Prior Year W2 Form
Common W2 Errors
There are as many things that can go wrong on a W2 as there are boxes on the form. Some common errors include:
- Incorrect spelling of the employee's name
- Incorrect employee address
- Incomplete or blank W2
- Error in the amount of withholding listed in W2 box dd
- Forgetting a decimal point
- Incorrect EIN or employer address
These errors are fairly small and easy to correct. However, there are some more serious errors that take some extra steps to fix. One such mistake is a serious withholding error. The IRS has very specific rules on Social Security and Medicare withholding to IRA and FSA contributions that can be made each year.
If you have made one of these errors, in addition to fixing the W2 form, you may need to refund money to the employee. In any of these cases, remember to be proactive and transparent in your reporting to your employee and to the IRS or Social Security Administration. Attempts to conceal or deny your errors will only make things harder for your business.
As much as possible, try to ask how to correct a w2 instead fo going around it and trying to conceal it.
Avoid Future Errors On W2s
Nobody is perfect. Mistakes are going to happen, and with the complexity of the tax code, details can slip through. However, there are many ways for businesses and contractors to survive tax season with few errors. Get help from professionals. Payroll processing and tax reporting will go more smoothly and with less stress - saving you time and money.
Process changes as soon as they're reported to you. Employees go through changes each year, whether it's a change of address or marital status. Keep your information up-to-date so that you're not also processing last-minute changes as well as tax information. Check and double-check before filing. Create your W2s well before you need to send them (remember the deadline is January 31st each year) so that you can take a much-needed break from all of the information. Come back to it with fresh eyes before sending everything out. Even this simple step can help you catch those devilish details.
Use Our W2 Form Generator.
Our online W2 tool is simple to use but can save you time and provide peace of mind that your W2 information is correct and complete. You will never even need to know how to correct a W2 if all your information goes out correctly the first time. We hope we've answered your questions about how to correct a W2 but if you still have some questions, check out the frequently asked questions section for further clarifications.